You will need a huge amount of money to upgrade or maintain a huge property. For a small property, the charge will be less and can be done easily. People often fail to understand what is capital expenditure so let me explain the meaning of it in simple terms. Capital expenditure refers to the fund used by a company to get, renovate, maintain physical assets like property, plants, buildings, furniture, equipment or more. They are long-term investments which states that the assets purchased have a useful life of one or more years.
Now buy or sale your property faster without paying any brokerage fees on NoBroker What is a capital expenditure in income tax definition?Capital expenditure as defined for tax purposes, is the purchase of assets whose usefulness or value to a company exceeds one year. They are often used by companies or organisations to fund new projects and investments.
The types of capital expenditureI hope now you understand what is meant by capital expenditure. There are types of capital expenditure as well so let me tell you about some of them about which I know:
Buildings and property
Upgrades to equipments
Software upgrades
Computer equipment
Vehicles
Intangible assets
There are more but these are the most common types of capital expenditure.
Formula of Capital ExpenditureThe formula of capital expenditure is simple. It is the addition of net change in Property Plant and Equipment value over a given period to the depreciation expense for the same year or
CapEx = PP&E (current period) - PP&E (prior period) + Depreciation(current period).
I hope I have been able to give you an idea about what is capital expenditure
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What is Capital Expenditure?
Sushma
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2 Year
2022-05-25T13:22:05+00:00 2022-05-27T17:31:55+00:00Comment
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